Different business plans for different readers
Did you know that the business plan you produce will be slightly different, depending on who you present it to? Yes it will and it is good to remember this when writing your business plan.
For a venture capitalist: These are high net worth individuals or companies who want to invest in a business and go out of the business making a healthy profit. Typically, a venture capitalist represents a group of investing companies and individuals backed by companies. It is rare that they use their own money to invest. They also tend to invest large amounts of money after carefully reviewing the investment risk associated with the company seeking the investment. This means that they tend to look for companies that are already established and are looking to expand or grow quickly. They expect a high rate of return on their investment, typically more than 25% of their investment. A venture capitalist will expect a high level of control over the company and usually a seat on the board of directors as well as voting rights with their shares.
When writing a business plan for a venture capitalist, it makes sense to include your potential exit strategy, such as an initial public offering, as well as your proposed contribution and stake in your company.
When you go to an Angel Investor. These investors are more likely to invest in start-ups and those seeking a lower level of funding. They also accept a higher level of risk than a venture capitalist. Angel investors typically invest in a type of company that interests them, and often want to be involved with the company as part of their investment. They are the place to go if you are looking for business mentoring to grow your business. They expect a lower percentage return on their investment, but are still looking for 20-30%. The Angel Investor will wait for shares for their investment, but their control will usually take the form of running the company along with the other major shareholders.
What this investor wants is to get involved in a business that interests him. That is why it is important to highlight the attractiveness of your sector, of the business and how they can get involved in your company.
When we go to a bank. Banks do not lend unless it is almost certain that they will get their money back. So when they apply for a loan, they look for collateral of some kind and the usual one they look for is a charge on your property or your company’s property. So if you have property, machinery, etc. that you may have a title, the business plan is where you emphasize this. Banks also don’t lend large sums of money to start businesses. What they are looking for within your business plan is proof that you have put a lot of thought into your business model and how you will make a profit in a short amount of time. They, like Angel Investor and Venture Capitalist, do not lend money to pay salaries while the company is being established.
A few things to remember when writing your business plan.
• Your executive summary is vital and the first part of the business plan that is read. It should summarize the key parts of the business, as well as arouse interest to move on to more detailed information. Since it is a summary, one trick is to write it in a rough format at the beginning of your business plan writing to help you establish your business plan. The executive summary should then be sorted and completed after you have written your business plan and used as a checklist that you have included everything.
• Your business plan should be linked with logical links from one section to another. You should tell a story of how you plan to establish, manage, and expand your business.
• It should be well structured with a table of contents and page numbers so that different people reading the plan can easily reach their preferred section.
• You should write your business plan for two different types of readers: the technical person who wants detailed facts and figures, and the business person who wants to see how you’re setting up your business and looking for business credentials, such as a big compliance process. and the participation of duly trained personnel.
• Ultimately, your business plan is the foundation of your business, but just as your business changes and evolves over time, so should your business plan.